Medtronic sees sales grow by 5% over quarter

Medtronic, the medical technology company poised to buy the Dublin-based Covidien plc and move here for tax purposes, said its quarterly sales grew 5% as demand rose for its pacemakers and aortic valves. 

Net income for the three months ended July 25 fell to $871m, or 87 cents a share, from $953m, or 93 cents, a year earlier, the Minneapolis-based company said in a statement yesterday.

Profit, excluding one-time items, beat by 1 cent the 92 cents average of 19 analyst estimates compiled by Bloomberg, while revenue grew to $4.27bn.

In June, Medtronic agreed to buy Covidien for $42.9bn in cash and stock to expand its portfolio of products sold to hospitals.

As part of the deal, Medtronic would move its legal address, though not its executive offices, to Ireland and lower its tax bills to the US government.

“We are confident that our strategies — therapy innovation, globalisation, and economic value — will further strengthen, diversify, and expand our market-leading competitive position,” Medtronic chief executive Omar Ishrak said in the statement.

“We believe we can accelerate these strategies with the Covidien acquisition, which we are fully committed to completing in the calendar fourth quarter of 2014 or early 2015.”

The accord by Medtronic, the world’s biggest maker of heart-rhythm devices, was among several in the healthcare industry that set off controversy in the US, with congressional leaders and President Barack Obama’s administration looking for ways to keep companies from moving.

Products to control the heart’s electrical pulses are Medtronic’s biggest business, and revenue rose to$1.26bn from $1.19bn a year earlier.

The increase was driven by a surge in pacemaker sales, up 11% to $525m, as demand for defibrillators that shock a stopped heart back into rhythm dipped 4% to $627m, from $655m.

The company’s CoreValve product, which won broader approval in June for US patients at high risk for surgery to repair a calcified aortic valve, helped push sales of structural heart products up 8% to $338m.

Medtronic agreed to pay Edwards Lifesciences Corp. $750m, plus royalties, in May to settle patent litigation over the device.

Demand for the company’s spinal products continued to decline, with sales of $743m, down from $765m a year earlier.

Medtronic gained less than 1% to $63.47 at the close yesterday in New York. The shares have increased 18% in the year to yesterday.

Bloomberg